February 26, 2024

How Mexico muddies the waters in combating climate change

MEXICO CITY/DUBAI (Reuters) – Mexico has labeled hundreds of millions of dollars in spending on fossil fuel infrastructure at state energy company Pemex and state electricity utility CFE as expenses to address climate change and promote the energy transition in last decade. documents show.

In an effort to track Mexico’s spending on these green goals under President Andrés Manuel López Obrador, Reuters analyzed public accounts and obtained Pemex documents and databases through a freedom of information request that show budget items designated with these labels. .

The documents showed that the government also labeled as part of its climate change efforts such disparate items as the Navy’s security operations and the distribution of fortified milk among the rural poor.

Under López Obrador, who took office in December 2018, various branches of government said they had spent a total of 462 billion pesos ($27 billion at current exchange rates) on combating climate change and 99 billion weights in the energy transition. The numbers include those proposed for 2024, the final year of López Obrador’s six-year term.

Of these, Pemex spent 5.6 billion pesos on climate change and 1.3 billion pesos on energy transition in the same period, public accounts show. Pemex does not list renewable energy projects in its public accounts.

Since López Obrador took office in late 2018, Mexico has boosted fossil fuel exploration and production despite growing environmental concerns, built one new refinery and acquired another, stalled renewable energy projects and weakened independent regulators. .

López Obrador has been under pressure from the United States and other countries, especially because of Pemex’s environmental record.

Pemex information shows that spending on fossil fuel infrastructure has often been labeled as green, complicating an assessment of Mexico’s efforts to combat climate change as promised in the 2015 Paris Agreement.

Mexico and other nations are under pressure to do more ahead of the United Nations COP28 climate meeting, which begins this week in Dubai.

The pattern of labeling such expenditures as green dates back a decade and continued during López Obrador’s presidency.

Neither the presidency, nor the finance ministry, nor Pemex nor the CFE responded to repeated requests for comment.

Victor Gomez, a former Finance Ministry official, said flexible rules and a lack of transparency mean different branches of government can declare almost anything as green.

“The (government branches) can allocate resources without being very selective in terms of projects,” Gomez said. “As climate change issues have received little attention from this government, the selection of projects focused more on social impacts than on environmental impacts.”

More than a dozen government and financial sources told Reuters that Mexico, once seen as a pioneer in global efforts to slow climate change, has been backtracking on its commitments under López Obrador, who has pledged to reduce dependence on energy imports from the United States. .

CRITICALLY INSUFFICIENT

In 2012, Mexico became the first major emerging oil-producing economy to pass a sweeping law paving the way for measures to reduce emissions. The law did not commit to a specific amount of spending.

And in 2015, Mexico, along with the rest of the world, committed at the United Nations Conference on Climate Change in Paris to take measures to contain global warming.

Mexico has committed to “decoupling greenhouse gas emissions from economic growth”, as well as achieving zero deforestation and taking measures to increase the resilience of its population, ecosystems and infrastructure.

“Mexico started very strong,” said Maria Jose de Villafranca, principal investigator for Mexico at Climate Action Tracker. “There has been a lot of dismantling under the umbrella of energy security and self-sufficiency.”

Mexico was the only country in the world to have its climate change efforts downgraded by the Climate Action Tracker twice in three years (in 2021 and 2022) — to “critically insufficient”, the lowest level. He stated that Mexico’s updated goals “lack transparency and disguise their lack of ambition.”

Compliance with the Paris Agreement is voluntary. Legal experts in Mexico said it would be difficult to hold the government accountable for not being more ambitious.

The government has not made officials available to discuss its climate change plans. Last year, Mexico said it would rely more on forests to offset emissions, as well as seek innovation and stricter regulation of the industrial and transport sectors.

GREEN LABELS

In response to Reuters’ freedom of information request, Pemex provided three unpublished databases and another document that lists expenditure on combating climate change and the energy transition.

The documents contain 709 entries relating to Pemex’s vast fossil fuel infrastructure, ranging from wells to pipelines and gas processing centers, identified by location and year, and designated as part of global climate change and energy transition efforts. over the last decade.

In many cases, it was not clear what work the entry referred to and Pemex did not respond to requests for elaboration.

Some funds were spent on studying the effects of greenhouse gases at the struggling Cactus gas processing center and monitoring air quality in the large Ku-Maloob-Zaap offshore oilfield cluster.

Half a dozen Mexican investigators who analyzed the documents said it was difficult to calculate the sums of money spent on projects that could be of questionable environmental value due to a lack of transparent criteria for allocations and imprecision in the details of the inputs.

But they said much of the expense paid in normal operations any responsible energy company should make.

This included the disposal of hazardous residual waste, the cleanup of contaminated land, and the maintenance and repair of infrastructure such as pipelines. The CFE, meanwhile, has placed green labels on the construction of natural gas infrastructure.

Some of these efforts may have helped reduce global emissions, the researchers said, but they do not represent the transition from fossil fuels to renewable energy that scientists have called for to limit the worst effects of climate change.

Reuters identified more than a dozen projects in this year’s budget across various branches of government labeled as related to “climate change” and “energy transition” that three government sources, who spoke on condition of anonymity, said did not appear to meet those definitions. .

The Ministry of Agriculture and Rural Development, for example, allocated funds to a private company that distributes fortified milk in rural areas; the Navy to “safeguard the sovereignty and security of national waters”; and the ministry of environment and natural resources to treat drinking water and build drainage. Those departments also did not respond to requests for comment.

Mexico has not released information about its strategy, which has been criticized by climate change experts as not complying with the Paris Agreement. It stipulates that countries must become more ambitious over time.

However, López Obrador has frequently stated that his priority is helping the millions of Mexicans living in poverty.

Its finance ministry has raised around $56 billion in bond markets since late 2018, LSEG data showed, of which $7.7 billion was in the form of sustainable bonds. The funds went mainly to health care, education and subsidizing small farmers, a government report showed.

“Their priority is clearly social development goals,” said Jason DeVito, emerging markets debt manager at Federated Hermes, echoing half a dozen other investors who spoke to Reuters.

($1 = 17.2031 Mexican pesos)

Reporting by Stefanie Eschenbacher in Mexico City and Simon Jessop in Dubai Additional reporting by Dave Graham in Mexico City Editing by Claudia Parsons

Our Standards: The Thomson Reuters Trust Principles.

Acquire licensing rightsopen a new tab

Stefanie covers energy, environment and climate change in Mexico and Central America – with a particular focus on Mexico’s troubled state oil company Pemex and its emissions. Born in Germany, she also spent over a decade writing about all things finance while living in the UK and Hong Kong. Before that, she worked in microfinance in Ghana. She has a master’s degree in economics and finance. Contact: +52 (1) 55 5414 6235

Simon leads a team that monitors how the financial system and businesses in general are responding to the challenges posed by climate change, nature loss and other environmental, social and governance (ESG) issues, including diversity and inclusion. Contact: +44 (0) 7795 036 759

Leave a Reply

Your email address will not be published. Required fields are marked *